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February 2, 1990


The opinion of the court was delivered by: Whitman Knapp, District Judge.

  After a bench trial of several days,*fn1 we made preliminary
findings on the record in plaintiff's favor, both as to the
direct claim that defendants Aretha Franklin and Crown
Productions, Inc., breached a contract under which Franklin was
to star in a musical production entitled "Sing Mahalia Sing"
("Mahalia"), and as to defendants' counterclaim alleging breach
by plaintiff of a second contract relating to the same
production. The parties have briefed several legal questions in
their post-trial submissions, and in light of that briefing we
have somewhat altered the tentative findings of fact and
conclusions of law. While we have reconsidered and changed our
view that defendants are liable for breach of contract, we do
hold defendant Franklin liable to plaintiff on a theory of
promissory estoppel. We adhere to our originally expressed view
that the counterclaim for breach of contract should be

The following recitation of facts is derived from the testimony and exhibits offered at trial, as well as the deposition testimony of defendant Franklin.*fn2 As this memorandum is not intended for publication, it contains only those facts necessary to permit the parties to understand our factual findings and legal conclusions.

In early 1984 Ashton Springer, the principal of plaintiff Elvin Associates,*fn3 began efforts to mount a Broadway musical production about the life and music of Mahalia Jackson, and wrote to defendant Aretha Franklin seeking her agreement to appear in the title role.*fn4 Franklin called Springer and expressed her strong interest in the production, and told Springer to contact her agents at the William Morris Agency. Springer spoke with Phil Citron and Katy Rothacker of that agency and in several conversations with the latter discussed the basic financial terms of Franklin's engagement to appear. Several proposals and counter-proposals were exchanged, in each instance relayed by Rothacker to Franklin and then back to Springer. Near the end of February 1984, Rothacker called Springer and informed him that his final proposal was acceptable.

In the interim, Springer had already set about making the necessary arrangements to get the production going. He was in frequent consultation with Franklin concerning artistic and production matters, although he negotiated the financial terms of the agreement strictly through her agents. During a conversation about rehearsal and performance dates, Franklin indicated to Springer that there were no other conflicting engagements on her schedule, stating: "This is what I am doing."

After consulting with Franklin, Springer hired George Faison as director-choreographer. In the second week of March, Springer and Faison flew to Detroit to meet with Franklin to discuss various aspects of the production, including rehearsal and performance dates. Franklin agreed on a tentative schedule that called for rehearsals to begin in April and performances to begin in May.

Springer had also in the interim contacted Jay Kramer, his attorney, about the proposed production and the terms he had discussed with Franklin's representatives. Kramer set up a meeting for March 23, 1984 with Franklin's representatives for the purpose of finalizing the agreement. Present at the meeting on that date were Springer, Kramer, Citron, Rothacker, Greg Pulis (an attorney at William Morris) and Andrew Feinman (Franklin's attorney). The basic financial terms that had been previously agreed upon in the Springer-Rothacker conversations were confirmed: Franklin would be paid $40,000 per week in salary, and an additional weekly amount to cover her expenses ($5000 per week while in New York; $4500 per week outside of New York). In addition, she would receive 15% of the show's gross weekly revenues exceeding $225,000 (the "break even point"), and 20% of the show's weekly profits. In return, she would commit herself to 12 weeks of performances. Springer and Kramer asked Franklin's representatives to call her and obtain her approval of these terms. The Franklin team left the meeting room, and shortly returned indicating that she had agreed to them. The only major issue left unresolved at the close of this meeting was the location for rehearsals, Franklin's representatives having requested that they be in Detroit. Faison subsequently vetoed this proposal, stressing that the lighting and costume designers that were to be engaged were all in New York. Springer did not convey this information directly to Franklin, but she ultimately learned through her agents that the rehearsals would take place in New York.

After the March 23 meeting, Kramer drafted a contract in the form of a letter to defendant Crown Productions, Inc., the corporation through which Franklin's services were to be furnished. Crown Productions was to be the primary obligor (and obligee) under the contract, and Franklin was personally to guarantee Crown's performance.

Before drafting the contract, Kramer had obtained from William Morris a copy of a "Domestic Rider" containing various required terms for all engagement contracts involving Franklin. Among the terms listed in the rider was: "This contract/agreement shall not be deemed valid until executed by ARTIST." At the bottom of the rider was the admonition "DO NOT DEVIATE." Kramer reviewed the rider to determine which terms were appropriate for inclusion in the draft. He did not include in the first draft the term concerning validity upon execution. As he testified: "It was impractical. We were underway. From the moment we left that room, given the schedule that we outlined Mr. Springer was well on his way to making financial commitment based on the understanding we thought we had reached." Franklin's representatives never suggested that the term be inserted in any of the subsequent drafts. However, every draft began with the sentence: "This letter [addressed to Crown Productions, Inc.], when countersigned by you, shall constitute our understanding until a more formal agreement is prepared."

In the ensuing weeks a series of drafts circulated between the principals and their various agents. The basic pattern was that Kramer would first send a new draft to Springer for his approval, and would then send it to Citron, Feinman and Pulis, who would return it marked up with their comments. Franklin reviewed at least some of these drafts, but could not identify any of them with certainty as having been reviewed by her.

Of the various changes made in the successive drafts, with or without intervening oral negotiation, all concerned relatively minor points. Other than a $15,000 increase in the "break even point" of gross weekly receipts, accompanied by a minor increase in the expense allowances, there were no changes in the material financial terms of the agreement reached on March 23. Although the first draft provided for rehearsals to begin in April and performances to begin in May, and did not specify a rehearsal location, the first revised draft provided for rehearsals to begin in June in New York City. Most notable of the incidental points that were negotiated through the circulation of the drafts was the means by which Franklin's representatives would verify that Crown was being paid its due percentage of the show's revenues; Springer would not agree to give them physical access to the box office, but did agree to provide financial statements that would be subject to an audit. Neither this nor any other issue emerged as a potential "deal-breaker." A final draft of the contract was ready for signature as of June 7, the date that Franklin was scheduled to come to New York to begin rehearsals for the show.

Springer had in the intervening weeks made all of the arrangements necessary for rehearsals to begin. He had hired set, lighting and costume designers, stage and technical crew, and had reserved dance studios. Springer was in frequent communication with Franklin during this period, as were Faison and other members of the production staff, concerning such varied matters as the compositions to be performed, the costumes she would wear, and the hiring of her own regular backup singers to be in the chorus. At one point, Franklin sang one of the production songs to Springer over the telephone. At some point during this period, Faison made final determinations as to the compositions to be performed and as to the cast and chorus.

As planned, rehearsals actually began on June 4 without Franklin, and continued for several days. Franklin did not arrive in New York on June 7 and, indeed, never came to New York for the rehearsals. Kramer immediately sought an explanation from Franklin's representatives and was informed that she would not fly. Springer paid the cast through the end of that week, but then suspended the production. He attempted to secure some other well-known performer to fill the title role, but none of the performers whom he contacted would agree to step into the role at that juncture.

On July 18, after having positive discussions with Les Matthews, a Texas financier who purported to be interested in backing the production, Springer wrote to Franklin with a proposal to revive it, whereby rehearsals and opening performances would take place in Detroit, with Franklin covering the excess expense caused by such an arrangement. The terms of Franklin's profit-sharing would be altered to account for the losses and additional costs caused by the suspended production. In August Franklin agreed to sign a draft agreement (doing so only on behalf of Crown Productions) so that Springer could regain some of his lost credibility with potential investors. Franklin's attorney held the signed draft in escrow, release from which was expressly conditioned on Springer's finalization of a performance schedule.

A final performance schedule was never arranged. One of the difficulties Springer encountered was that, due to the collapse of the earlier production, theaters and concert halls were now requiring substantial deposits to reserve particular dates. Springer lacked the capital to make those deposits. Matthews failed to appear for the scheduled closing of the investment agreement in early September, and Springer was unable to obtain any other financing for the production. He ultimately abandoned this second attempt at mounting the "Mahalia" production.

This lawsuit ensued, with Springer (suing in the name of Elvin Associates) alleging breach of the original agreement to appear in "Mahalia," and Franklin counter-claiming for breach of the second agreement concerning the proposed Detroit-based production. In his pre-trial memorandum, Springer asserted an alternative right to recover on a theory of promissory estoppel.*fn5


The central issue pertaining to plaintiff's claim for breach of contract is whether or not the parties to that proposed contract, i.e. Springer, Crown Productions, Inc., and Franklin in her capacity as guarantor of Crown's performance, evinced an intent not to be formally bound before execution of a written, integrated contract. Language inserted in a draft of the agreement referring to its validity upon execution has generally been found to be strong (though not conclusive) evidence of intent not to be bound prior to execution. R.G. Group v. Horn & Hardart (2nd Cir. 1984) 751 F.2d 69, 75; Reprosystem, B. V. v. SCM Corp. (2nd Cir. 1984) 727 F.2d 257, 262. Although we based our tentative findings largely on the fact that all of the incidental terms had been worked out by the final draft, and that the understanding was that Franklin would sign the agreement when she came to New York, there remains the obstacle of the preamble that Kramer drafted and that remained in every draft, namely: "This letter, when countersigned by you, shall constitute our understanding until a more formal agreement is prepared." After reviewing the above cited authorities and the post-trial submissions, we are constrained to find that such language indicates that Crown Productions, Inc. was not to be contractually bound to Springer until the draft agreement was executed. This clause is simply too close to the language held to be decisive in Reprosystem, supra, to be ignored. The cause of action for breach of contract must therefore be dismissed as against both defendants, as the absence of direct contractual liability on Crown's part eliminates any possible basis for Franklin's derivative liability as Crown's surety.*fn6

That, however, does not end the case. As above noted, plaintiff has asserted, in the alternative, a right to recover on a theory of promissory estoppel. The elements of a claim for promissory estoppel are: "[A] clear and unambiguous promise; a reasonable and foreseeable reliance by the party to whom the promise is made; and an injury sustained by the party asserting the estoppel by reason of his reliance." Reprosystem, supra, at 264 (quoting Ripple's of Clearview, v. Le Havre Associates 88 A.D.2d 120, 452 N.Y.S.2d 447, 449). The "`circumstances [must be] such as to render it unconscionable to deny' the promise upon which plaintiff has relied." ...

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